Impact of Small Scale Irrigation on Farm Technical Efficiency and Household Income in Amhara Regional State: A Stochastic Approach

Abstract

Agriculture is the main stay of Ethiopian population with a significant contribution to GDP. More recently the quest for more enhanced production and productivity has become an urgent issue of importance in the agriculture sector. The use of yield improving technological innovations is paramount importance towards this goal. As the potential to increase production and productivity by bringing more resources in to use is limited, the efficiency in which the farmers use available resources has received the utmost attention. This being the case, in this study effort has been made to assess the impact of small scale irrigation on farm technical efficiency and household income. The study was conducted in Amhara regional state. The survey data was collected from four kebeles in Sekela woreda of west Gojjam administrative zone in the year 2014/15 from 119 households. The data collected considered two groups of farm households, irrigation users and non-user households. Stochastic production frontier function with inefficiency variables had been applied to estimate technical efficiency. The finding of income variables indicate that land, access to irrigation, credit, education, labor, total livestock unit, and ox have significant contribution to household income. Among the input variables land and ox have positive and significant contribution to farm production whereas labor has negative contribution to farm production. The coefficient of land and oxen is  0.9 and 0.28 for irrigation users and 1.56 and 0.46 for irrigation non users respectively indicating  greater marginal contribution  of input  variables when irrigation technology is in place.  The inefficiency variables, age square , access to irrigation and land are  found to improve farm efficiency while age of the household, gender, and dependency ratio have negative contribution to farm technical efficiency. Distance of the farmer’s house from development center and extension participation is not statistically significant. The mean technical efficiency of the whole sample was found to be 71% indicating that there is a possibility of improving the farm output on average by 29% if the technical efficiency of less efficient households could perform better to obtain the maximum attainable level of output.

Keywords: Technical efficiency, Stochastic production frontier, Sekela woreda, Irrigation user and non-user.

DOI: 10.7176/DCS/11-5-01

Publication date:May 31^st 2021